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Inflation! Inflation! Inflation!

Inflation! Inflation! Inflation!

On Wednesday, the FOMC Meeting Minutes and Fed speeches hammered home that the Fed is committed to getting inflation back to 2% but was not clear as to how this will be achieved. Some members are calling for a 50 bp rate rise to slow inflation. Just in case you were unsure, the hot topic is Inflation! Inflation! Inflation!

The minutes of the FOMC’s first policy meeting of the year revealed that all policymakers agreed more rate hikes will be needed to achieve inflation objectives. The publication also acknowledged that a “few participants” favoured raising rates by 50 basis points but didn’t offer any details regarding these discussions. In turn, the benchmark 10-year US Treasury bond yield recovered modestly from daily lows but ended up closing in negative territory. Meanwhile, Wall Street’s main indexes ended the day mixed.

The US Bureau of Economic Analysis will release its second estimate of the fourth-quarter Gross Domestic Product (GDP) growth today. The US economic docket will also feature the weekly Initial Jobless Claims and the Chicago Fed’s National Activity Index.

To round off the week, the personal consumption expenditures price index—better known as the PCE Index—will be released.  It is one of the main measures of inflation and consumer spending trends in the U.S. economy. The Bureau of Economic Analysis (BEA) publishes the PCE index each month to track spending and inflation.

The next Fed rate-setting meeting will be 21^st-22^nd March.  The PCE report will be an important measure for the Fed along with the next NFP.

The PCE price index is the Fed’s favourite inflation gauge so pay attention and be ready for an opportunity to trade!

Thursday 23rd February High Impact Event

• 15.30 GMT+2 – US – Prelim GDP q/q

Potential instruments to Trade: USD Crosses.

Friday 24th February High Impact Event

• 15.30 GMT+2 – US – Core PCE Price Index m/m

Potential instruments to Trade: USD Crosses.

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